No two ways about it, the inflation figures were bad. Some increase in the annual cost of living had been expected but not a jump to 2.7%. It's now easy to see why the Bank of England – which would have seen the figures in advance – decided to sit on its hands at last week's meeting of the monetary policy committee.

True, there were a few one-off factors that made the rise look a bit worse than it was. The wretched UK summer and the drought in the United States are having an impact on food prices. October's increase was clearly affected by university fees, which went up to £9,000 a year last month. And dearer domestic energy bills are starting to thud on to doormats.

Even so, the core rate of inflation – which strips out food and energy costs – rose strongly last month, from 2.1% to 2.6%. That's a sign that UK inflation is a bit more stubborn than Threadneedle Street previously thought. Despite a double-dip recession that might soon become a triple-dip recession, it is worrying that the annual rate of inflation has been consistently above its 2% target.

City analysts think there is probably worse to come, and that inflation may breach the 3% level over the next couple of months. That would force Sir Mervyn King to write yet another letter to the chancellor explaining why the annual increase in the cost of living is more than a percentage point above its 2% target.

If that should happen, King would almost certainly say that the increase in inflation is due to factors largely outside the Bank's control, that he expects it to fall back during the course of next year, and that therefore it would be unwarranted for the MPC to tighten monetary policy in response.

Further easing of policy, however, now looks less likely, particularly given that some members of the MPC believe it is subject to the law of diminishing returns. Higher inflation is bad for the economy's recovery prospects, and bad for George Osborne's deficit reduction plan, because it erodes the purchasing power of consumers. As has been the case for the past three years, prices are rising faster than wages and that is reducing real incomes.

The squeeze is not as intense as it was a year ago – when inflation was above 5% – but it will be enough to keep consumer spending muted during 2013. And unless there is better (and, as things stand, improbable) news from any other of the components of demand – investment, trade or government spending – that means another year in which growth will be lower, and inflation higher, than expected.